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2. DESCRIPTION OF THE COMPANY AND THE PRODUCT
3. MARKET DEFINITION AND POSITIONING
4. EXTERNAL ANALYSIS (PEST TOOL. OPORTUNITIES AND THREADS)
4.1. PEST Analysis
5. INTERNAL ANALYSIS (STRENGTHS & WEAKNESSES)
8. INTERNET REFERENCES
LIST OF FIGURES
1. GRAPHIC 1: Smartwatch Market Share 2014
2. GRAPHIC 2: Estimates for Apple Watch unit sales in 2015
3. GRAPHIC 3: Positioning map of the Apple Watch and its competitors
In this assignment the main goal will be to define and analyze the target market for the recently launched Apple Watch. For this some of the marketing concepts and tools (SWOT analysis, PEST tool, etc.) reviewed in the theoretical sessions of the MBA marketing module will be put in practice.
According to the American Marketing Association (2013) “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large“. In a much shorter version marketing is “meeting needs profitably” and “marketing management is […] the science of choosing target markets and getting, keeping, and growing customers through creating, delivering and communicating superior customer value”.
After the iPhone’s selling success, Apple has entered the smartwatch segment with the Apple Watch to also become the leader. This assignment will analyze some internal and external key factors which could potentially have a very deep impact on Apple’s chances to succeed. This analysis will identify the Apple Watch value proposition; assess any risks involved in the product go-to-market approach and discuss the potential market trends.
After performing the above mentioned analysis and definition of the Apple Watch market and target customers and according to the outcomes, the Apple Watch USP (Unique Selling Proposition) will be formulated in the Conclusion section of this assignment.
Apple Inc. (former Apple Computer, Inc.) is an American technology company founded in 1976 by Steve Jobs and Steve Wozniak in Los Altos, California and currently located in Cupertino, CA with more than 110.000 employees worldwide. The company started manufacturing only computer software and hardware, to latter on add music players, peripherals, phones and tables to its product portfolio. Apple also offers services, manufactures accessories and distributes third-party technology products worldwide through a vast logistic network based on Apple’s own stores in major cities and locations and reserved space in some stores (Apple Shop-in-Shop concept). The company, which had some ups and downs in the nineties, has turned since the introduction of the iPod, and especially since the launch of the iPhone in 2007 and the iPad, into the world’s biggest technology company by sales revenue and total assets owned becoming a referent for marketing strategy, innovation and industrial design. According to the Financial Times Global 500 list the company has a total market capitalization of over $725 billion.
The Apple Watch was launched on April the 15th and is Apple’s first incursion in the so called wearable category. It is an innovative highly customizable smart watch equipped with a high resolution touchscreen and powered by a reduced version of the company’s popular iOS (iPhone Operating System) in which thousands of third party apps can be installed and several watch bands can be exchanged strengthening the user’s personal style. Especially revealing is the bundle of sport or health-related apps already included and the ones available on Apple’s App Store as a way to directly approach the increasing demand for devices able to measure all kinds of vital signs. The aim of the product is at complementing the iPhone use by freeing the user from having to take the phone out of the pocket to command it.
The product is offered in three different lines: the Apple Watch Sport for the entry segment priced at 399€ - 449€ in Germany; the Apple Watch priced between 649€ - 1.249€ for the premium segment; and the exclusive Apple Watch Edition made of gold for the luxury market at a price between 11.000€ - 18.000€, depending on the configuration. Every model is available in a smaller 38mm diameter or bigger 42mm diameter watch face.
As a device indicating the time, the Apple Watch should first be considered within the broader watch market in which a wide range of pricing, styles, materials, brands, etc., ensure that each customer finds exactly what he is willing to pay for. At the same time the Apple Watch is a product aimed at the technology watch sub-market and specifically to the wearable gadgets and trackers niche which has boomed over the last two years developing from an eccentricity aimed at those hardened technology users into an almost mainstream product with an increasing legion of fans of all ages who either use it as a second watch or are ready to use it as their main one.
The first potential user of the Apple Watch would be broadly speaking any regular watch user. But given the specific characteristics of the product it would be more specifically directed to a heavy technology user and early adopter . As a smartwatch, The Apple Watch will speak to any technology user who wants to have his first smartwatch or substitute his old one. However any watch user could eventually find Apple’s smartwatch interesting especially if he is already an iPhone user.
Taken into account the special characteristics of the Apple Watch and its pricing, we could identify the Apple Watch target consumer as an well-informed brand-driven avid technology consumer with a medium, medium-high or high income level who appreciates innovation and for whom technology devices do not only have a mere functional goal but should also look beautiful, elegant and trendy. This consumer knows the “Apple” brand, values it and is probably not buying his first apple product as Apple fans are among the most loyal. Besides fitness and most sport users across all segments could also benefit enormously for the tracking capabilities offered by this watch.
A special mention is required for the upper Apple Watch Edition with a 18 carat gold case whose entry price is 11.000€ targeting customers with no budget restrictions, who enjoy luxury watches, especially those manufactured in precious metals but are open enough to move away from the traditional luxury brands dominating this segment and make his first incursion into the new smartwatch category.
Ultimately any iPhone user could eventually be a potential Apple Watch user as it works seamlessly with the Apple phone and even allows the telephone to be accessed without taking it out of the pocket.
In 2014, prior to the launch of the Apple Watch, Samsung led the smartwatch market with almost a quarter of the whole revenues and some other companies were following at some distance. Samsung main competitors were Sony, Asus or Lenovo but also more specialized and experienced firms in the gadget segment like Polar, Garmin or Withings.
Abbildung in dieser Leseprobe nicht enthalten
Graphic 1: Smartwatch Market Share 2014
Unfortunately no verified data regarding 2015 market shares can be found yet but the International Data Corporation estimates Apple Watch market share in 2015 to be around 61,3%, which would position Apple after less than a year as the new market leader.
Abbildung in dieser Leseprobe nicht enthalten
Graphic 2: Estimates for Apple Watch unit sales in 2015
In 2015 competing with the Apple Watch Sport in the same budget category we find the new Moto 360 from Motorola, the G Watch R from LG, the Smartwatch 3 from Sony and the Gear S2 from Samsung. These products between 200€ and 399€ would also compete indirectly with the Apple Watch, since especially the watches from Samsung and Sony although cheaper, are investing heavily on R&D and would offer similar technical specifications than the middle Apple model at a cheaper price.
The Tag Heuer Formula One model (priced at around 1.000€) and the Tag Heuer Connected (1.500€) are the very first comparable rivals for the Apple Watch model fighting with it on equal footing for the same middle-upper segment. Also the new model from the Swiss watchmaker Frederique Constant would target the same segment with a starting price of 950€. Additionally new smartwatch versions from brands like Breitling, Bulgari or Vector would be positioned in the same segment targeting a customer with the same budget but a more conservative taste in design and preference for long established luxury brands.
There is currently only one recently launched product competing with the Apple Watch Edition, the Rolex Sub-Oyster-Tron. With this model Rolex intends to defend its status and position in the luxury watch market. The fact that not many other luxury brands have yet decided to make their move into the growing smartwatch luxury segment is a clear example of conservatism from traditional watch manufacturers which still look reluctant at this new market. However it can be expected that in a near future more luxury brands will enter the market trying to get their own share.
 Kotler, P. & Keller, K. L. (2006), p. 5.
 Ibid., p. 6.
 Statista (2016).
 Chen, L. (2015).
 Dullforce, A. B. (2015).
 New product category in the technology industry which mixes technology with fashion and can be worn and carried around at any time like watches, fitness wristbands, jogging trackers, etc. (Tehrani, K. & Andrew, M., 2014).
 Apple Inc. (2016).
 “Minority group (comprising about 14 percent) of population which, after innovators, is first to try new ideas, processes, goods and services“ (Business Dictionary, 2016).
 Goodson, S. (2011).
 Statista (2016).
 IDC (2015).
 AppleInsider (2015).
 Specout (2015).
 Tag Heuer is a swiss luxury watch brand founded in 1860 which has recently entered the smartwatch market segment.
 Lamkin, P. (2016).
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